Workiva Inc. (NYSE: WK) Q4 2021 earnings call dated Feb. 22, 2022
Corporate Participants:
Mike Rost — Senior Vice President of Corporate Development and Investor Relations
Martin J. Vanderploeg — President and Chief Executive Officer
Jill Klindt — Senior Vice President, Chief Financial Officer and Treasurer
Julie Iskow — President and Chief Operating Officer
Analysts:
Matt Stotler — William Blair & Company — Analyst
Daniel Jester — BMO Capital Markets — Analyst
Joe Meares — Truist Securities — Analyst
Stan Zlotsky — Morgan Stanley — Analyst
Rob Oliver — Robert W. Baird & Co. — Analyst
Mike Grondahl — Northland Securities, Inc — Analyst
Andrew DeGasperi — Joh. Berenberg, Gossler & Co. KG — Analyst
Alexander Sklar — Raymond James Financial — Analyst
Presentation:
Operator
Ladies and gentlemen, thank you for standing by and welcome to Workiva’s Fourth Quarter Fiscal 2021 Earnings Call [Operator Instructions]. Mike Rost, Senior Vice President of Investor Relations, you may begin your conference.
Mike Rost — Senior Vice President of Corporate Development and Investor Relations
Good afternoon, and thank you for joining us for Workiva’s fourth quarter and full-year 2021 earnings conference call. During today’s call, we will review our fourth quarter 2021 results and discuss our guidance for the first quarter and full-year 2022. Today’s call has been prerecorded and will include comments from our Chief Executive Officer, Marty Vanderploeg, followed by our Chief Financial Officer, Jill Klindt. We will then open the call up for a live Q&A session. Julie Iskow, our Chief Operating Officer, is also on the call. A replay of this webcast will be available until March 1, 2022. Information to access the replay is listed in today’s press release which is available on our website under the Investor Relations section.
Before we begin, I would like to remind everyone that during today’s call we will be making forward-looking statements regarding future events and financial performance, including guidance for the first quarter and full fiscal year 2022. These forward-looking statements are subject to known and unknown risks and uncertainties. Workiva cautions that these statements are not guarantees of future performance. All forward-looking statements made today reflect our current expectations only and we undertake no obligation to update any statement to reflect the events that occur after this call. Please refer to the company’s annual report and Form 10-K and subsequent filings for factors that could cause our actual results to differ materially from any forward-looking statements.
Also, during the course of today’s call, we will refer to certain non-GAAP financial measures. Reconciliations of non-GAAP to GAAP measures and certain additional information are also included in today’s press release.
With that, we’ll begin by turning the call over to our CEO, Marty Vanderploeg.
Martin J. Vanderploeg — President and Chief Executive Officer
Hello, and thank you for joining today’s call. The Workiva team once again delivered strong financial results. In both, the fourth quarter and full-year, we beat the high end of our guidance in revenue and operating profit. We generated record revenue during Q4, which resulted in growth of over 28% in Subscription & Support revenue and total revenue. Our results reflect our market leadership in transparent connected reporting and the significant increases we’re seeing in macro trends such as digital transformations, increased compliance and reporting requirements and stakeholder demand for ESG data.
In Q4, we outperformed in multiple solution areas including ESG. We continue to see substantial upside in this growing and exciting solution area and plan to invest heavily to secure more of the ESG market. I will discuss our ESG strategy later in this call. Workiva continues to perform with our extraordinary talent and our innovative reporting platform. In Q4, we had strong new logo growth adding 169 net new logos. We delivered a 32% increase in the number of customers with contract values over $100,000. We also achieved our highest revenue retention rate of 97%.
In 2021, we continued to expand our partner ecosystem which now includes over 200 entities. Our partners are an important part of our growth strategy. They extend our geographic reach, accelerate the usage and adoption of our platform and enable more efficient delivery of professional services. Most recently, we announced a new partnership relationships to support our ESG growth. In Q4, we announced that we are expanding our alliance with PwC to bring a people-led and tech-powered approach to ESG strategy and reporting. We are aligned in our belief that the convergence of both, regulatory pressure and investor demand will dramatically impact how and the level at which companies disclose the ESG data. Working together, we plan to build purpose driven ESG strategies for our mutual customers.
We also expanded our relationship with the KPMG ESG practice. Workiva and KPMG are collaborating in the marketplace and have engaged in discussions with executives from leading financial institutions about how their organizations are addressing ESG in light of stakeholder, investor and government expectations. On the ESG technology side, we announced last week, a new partnership with Persefoni, a carbon accounting platform that enables users to turn financial, operational and supply chain data in the certified carbon footprint data. The Persefoni partnership will enable customers to integrate and transfer data between our respective platforms and will provide access to the carbon benchmarking and a carbon offsets marketplace.
We have also been busy on the M&A front. In the fourth quarter, we completed two tuck-in acquisitions that we believe will further support the competitiveness of our platform. On December 21st, we announced the acquisition of AuditNet. AuditNet’s cloud platform serves as a primary communications resource and digital network for over 160,000 audit practitioners, access and share count, resources, tools and templates. This strategic acquisition supports our investment in the future of audit transformation, adds to our customer offering and helps to grow our marketplace.
We also announced the December acquisition of Arelle, the global standard XBRL validation engine. Arelle is used by community of over 50 global regulators, banks and technology companies, including Workiva, that depend on it for data quality and comparison. We believe transparency will bring about a better world and Arelle helps make that happen.
Moving onto 2022, we entered the year with great momentum and are now strategically investing in our ESG offering to accelerate global growth, advance our product roadmap and increase pipeline. We believe that we have a large TAM and we continue to invest to expand our TAM. At our Investor Day in November, we discussed that outside of the SEC solution, we believe our penetration is still early in all other solution areas. With new markets and expanded opportunities, we communicated a revised, conservative TAM estimate of $25 billion, including ESG.
ESG reporting is complex, making it a natural fit for our platform and a compelling market for us. We have over a decade of experience and have invested over $600 million to deliver a cloud platform that supports investor grade reporting for the world’s largest organizations. We are highly encouraged by our customers’ and partners’ initial response to our ESG solution. It is still early, but the global market is moving fast. This year we are strategically investing in our people, technology, partners, and go-to-market strategy in order to capture the significant ESG market opportunity. The majority of our new investments are being leveraged in support of the ESG. We believe the investments we are making in ESG, along with our other solutions will position us to deliver durable low to mid 20% revenue growth.
To support our growth and scale, I am pleased to share that Julie Iskow has been promoted to President and Chief Operating Officer. In her expanded role, Julie will be responsible for Workiva’s global growth strategy and commercial operations, including enterprise-wide product development, platform innovation, sales, marketing, service delivery and customer success. Congratulations to Julie on this well deserved promotion. I’m looking forward to working closely with her as we advance Workiva’s mission of powering transparent reporting for a better world.
In closing, we delivered very strong results in 2021, driven by the focused execution of our strategy. We continue to grow the business by attracting and retaining top talent, investing in the development and innovation of our platform and fit-for-purpose solutions and consistently delivering an outstanding customer experience. It continues to be an exciting time for Workiva. We believe we are well positioned and have the right strategy in place to capitalize on the increasing global opportunities to power transparent reporting for a better world.
With that, I will turn the call over to Jill.
Jill Klindt — Senior Vice President, Chief Financial Officer and Treasurer
Thank you, Marty, and good afternoon everyone. Q4 was a great quarter, providing a strong finish to what was an outstanding year for Workiva. We continued to see broad-based demand with revenue performance across our solution portfolio. Today, we are providing guidance for Q1 and an update to our full-year guidance for 2022, which I will discuss later. I will talk about our results and guidance on a non-GAAP basis. Refer to our press release for a reconciliation of our non-GAAP and GAAP results in guidance.
We beat Q4 2021 revenue guidance at the midpoint by $3.8 million. Solid market demand at higher Services revenue accounted for the beat. We beat guidance on Q4 operating results of the midpoint by $4.5 million. The revenue being coupled with lower consulting fee expense and T&E makes up the majority of the beat on operating income.
Turning to Q4 2021 results versus Q4 the year before. We generated total revenue in the fourth quarter of $120.8 million, showing growth of 28.7% from Q4 2020. Breaking out revenue by reporting line item. Subscription & Support revenue was $104.3 million, up 28.8% from Q4 2020. New logos and new solutions helped drive strong revenue growth in Q4 2021. 72% of the increase in S&S revenue in Q4 came from new customers added in the last 12 months. Professional Services revenue was $16.5 million in Q4 2021, up 28.2% from the same quarter last year. This was largely due to higher XBRL services revenue and expanding SEC customer base, combined with the introduction of FERC XBRL services were the primary drivers to the increase.
Turning to our supplemental metrics. We finished Q4 with 4,315 customers, a net growth of 592 customers from Q4 2020, and a net growth of 169 customers from Q3 2021. This performance capped off a fantastic year for new customer growth as Q3 and Q4 represented the two highest net increases to customer count we have had as a public company. Our revenue retention rates improved compared to prior year. Our Subscription & Support revenue retention rate was 97% for the fourth quarter of 2021, an increase compared to 95% for the same period last year. These numbers reflect our focus on customer experience and continued investment in our platform. With add-on, our Subscription & Support revenue retention rate improved to 110% for the fourth quarter of 2021, compared to 109.5% in Q4 2020. The number of larger subscription contracts continues to show impressive growth. In the fourth quarter of 2021, we had 1,121 contracts valued at over $100,000 per year, up 32% from Q4 of the prior year. The number of contracts valued at over $150,000 totaled 578 customers in the fourth quarter, up 38% from Q4 2020. At our November 2021 Investor Day, we introduced the disclosure of subscription contract value over $300,000. This contract value segment showed the highest growth of the three, 54% from Q4 2020, with the number of contracts valued at over $300,000 totaling 183.
Moving down to P&L. Gross profit totaled $93.2 million in Q4, up 31.3% from the same quarter a year ago. Consolidated gross margin was 77.2% in the latest quarter versus 75.6% in Q4 2020, net expansion of 160 basis points. Breaking out gross of gross profit. Subscription & Support gross profit totaled $87.7 million, equating to a gross margin of 84.1% on its net revenue, a contraction of 10 basis points compared to Q4 2020. Professional Services gross profit in the fourth quarter was $5.5 million, up 95.7% versus Q4 2020, equating to a 33.5% gross margin. Q4 gross margin was particularly high as substantial Professional Services revenue growth, coupled with a modest increase in compensation led to strong year-over-year performance.
Research and development expense in Q4 totaled $28.6 million, up 29.6% from Q4 2020 due to new head count expenses. R&D expense as a percentage of revenue increased to 23.7% in Q4 2021 for 23.5% in Q4 2020. Sales & Marketing expense for the quarter increased 33.1% from Q4 2020 to $46.8 million, as we continue to make go-to-market investments in support of our growth objectives. General & Administrative expenses totaled $15.6 million in Q4, up $7 million compared to Q4 2020. G&A expenses as a percentage of revenue increased to 12.9% from 9.1% in Q4 2020. This increase was driven primarily by investment in head count, coupled with higher T&E and software expenses as we scaled our business for growth. We posted an operating profit of $2.2 million in Q4 2021, compared to an operating profit of $5.2 million in Q4 2020.
Turning to our balance sheet and cash flow statements. At December 31, 2021, cash, cash equivalents and marketable securities totaled $530 million, an increase of $8.1 million compared to the balance at September 30, 2021. Net cash provided from operating activities in Q4 2021 totaled $9.3 million compared with cash provided of $13.4 million in the same quarter a year ago, impact from AuditNet and Arelle acquisitions. Our reported results contain the full absorption of the AuditNet and Arelle transactions, which were both closed in December 2021. These two strategic tuck-in acquisitions will not have direct material impact on revenue or operating profit.
Turning to our guidance. For the first quarter of 2022, we expect total revenue to range from $127 million to $128 million. We expect Subscription revenue will continue to grow at a faster rate than Services revenue in Q1. We expect non-GAAP operating loss to range from $7 million to $6 million, a net loss of $0.16 to $0.14 on a per share basis. Our share count will be approximately 52.6 million weighted average shares.
For the full year 2022, we are raising guidance for revenue. We now expect total revenue to range from $532 million to $534 million. We expect non-GAAP operating loss to range from $37 million to $35 million or a net loss of $0.80 to $0.76 on a per share basis. Our share count will be approximately 53 million weighted average shares. And in 2022, we expect to post positive free cash flow for the sixth consecutive year.
Our current 2022 assumptions are dependent on a variety of factors that are subject to change and that we believe are appropriately conservative for the current environment. This guidance for operating margin includes new investments in sales and marketing, geographic expansion, investments in research and development and ESG, as we intend to take advantage of growth in new markets and in expanding TAM. This guidance takes into account the return of expenses that were reduced by COVID, primarily, travel costs and in-person events, as well as the market pressures we are experiencing related to attracting and retaining top talent.
In closing, I would like to thank the more than 2,100 global Workivians who have enabled us to drive record-breaking results in Q4 and the full-year 2021. You are the key to Workiva’s success. With this great team, we are very well positioned to execute on our 2022 strategy. We will now take your questions. Operator, we are ready to begin the Q&A session.
Operator
At this time….
Jill Klindt — Senior Vice President, Chief Financial Officer and Treasurer
Operator, we are ready to begin the Q&A session.
Questions and Answers:
Operator
[Operator Instructions] Your first question comes from the line of Matt Stotler with William Blair. Your line is open.
Matt Stotler — William Blair & Company — Analyst
Hi, everybody. Thanks for taking the questions. Maybe I’ll just start off with one on ESG and the plans to increase spending there in the coming year. Obviously a massive multi-billion dollar opportunity, something you guys are obviously really laying into that, given the early days there and you have a leadership position. We hope to maybe put a finer point on how you’re thinking through those expenses as we go into 2022? Whether that’s more on the direct sales partnership side, sales, marketing, whether there is a heavy amount of additional product investment that’s embedded in that guidance or across the Board? Any color there would be helpful.
Martin J. Vanderploeg — President and Chief Executive Officer
Hey, Matt. Thanks for the question. Probably one of the more relevant question in my brain nowadays is attacking this ESG market and since the last time I talked to you or even since we gave our guidance for 2022, the opportunity is even becoming more compelling. And so, to answer your question specifically, the majority or the largest portion of that is sales and marketing. We’re expanding our sales team with a focus on ESG and we’re going to do that aggressively. We’re also making significant R&D investments. There’s things we had to enhance on our platform. Luckily, all these things play into our other — most of them play into our other products as well. So even though they are specifically for ESG, they do support and improve the other solutions. Things like workflow and better connectivity and then some of the more specific things like supporting all the different frameworks, they have to report in ESG — so ESG data. And so a mixture of both of those. We’re also going to put more effort into our go-to-market in terms of PR and building on our brand. So those are the main areas. And like I said, this is becoming so compelling. It’s a really generational opportunity for Workiva and for our employees and shareholders. So you know how careful we are with capital. We’ve built this company with very little capital and we’re still going to remain cash flow positive, but we were just compelled to make a really meaningful investment into this market. So that’s really the reason for what you see in terms of the reduction in margin.
Matt Stotler — William Blair & Company — Analyst
Got it. Got it. That’s very helpful. And then maybe just one quick follow-up on the capital markets products. Obviously, it’s something that has seen some strength last year. From what I recall, there wasn’t much baked into the original commentary in 2022 but we’ll just going to bid on what you’re seeing there and how that layers into 2022 and thoughts on, you’ve talked about that has been kind of a leading indicator. So, I mean what the thought is about how the current slowness in that segment market is going to color the rest of the year will be helpful.
Martin J. Vanderploeg — President and Chief Executive Officer
Sure. First off I just want to say we’ve baked all that into our guidance. Clearly, there is a lot of uncertainty politically right now, globally with all the stuff that’s happening and with inflation around, so we realize it’s going to be a tougher year in capital markets. As I indicated last time, we had single digit percentage of that market already and we have about tripled the size of our sales team there. So I think we’re going to offset any slowness in the terms of the whole year, we are going to offset that slowness which is picking up a bigger market share. We’re already seeing that a lot of the people or companies that plan to go public or still preparing to go public, which is what’s relevant to us. Will they delay the IPOs, well obviously there hasn’t been a hot bed of IPO so far this year, but we are seeing some slowdown but not a lot, but we’ve also baked it in and like I said, are going to take a bigger percentage of the market this year. And on top of that, other solutions tend to always step up. I’ve talked about our multi-solution strategy and we’ve had this quarter’s solutions that were very strong. I’m sorry, Q4 that were very strong and look good going into this quarter. IRR has been outperforming relative to historical trends. We’ve really started to begin the critical mass on our GRC integrated risk product line and the multi-solutions for private to public is still very strong. So the portfolio approach tends to mitigate these segments of our business that have slowed down. So it’s all baked in, and we feel really good about 2022 in general.
Matt Stotler — William Blair & Company — Analyst
Got it. It’s helpful. Thanks again.
Martin J. Vanderploeg — President and Chief Executive Officer
Yeah. Thank you.
Operator
Your next question comes from the line of Daniel Jester with BMO Capital Markets. Your line is open.
Daniel Jester — BMO Capital Markets — Analyst
Oh, great. Thanks for taking my question. Maybe just sticking with ESG. Can you expand and give us some more color on sort of the pipeline creation? How is that evolving and maybe compare and contrast your conversations with current customers on ESG versus potentially brand new adds on the ESG side? Thanks.
Martin J. Vanderploeg — President and Chief Executive Officer
Sure. That’s a good question in many, many different ways. I would first characterize that the Q4, our performance in ESG surprised everyone in the company, to be honest. We had a really good quarter on ESG sales. It immediately has become a material part of our portfolio, faster than any other solution has done that. We’re also seeing good pipe growth and we’re very encouraged and but we’re still dealing with a fairly small number of salespeople selling this and we’re in the midst of ramping that significantly and that’s part of —obviously, a biggest part of our investment is ramping the sales team. So, the majority of the customers of our, been our customers that are looking at it. We’ve had new logos come in through the ESG solution, but that’s mostly a reflection of where we go first. The first people we call with the new solutions are existing customers.
Just to expand on that, it’s becoming clear from not only the FCC but the EU authorities and other people that these ESG metrics are going to be meshed right in with the financial metrics over time. They’re going to even use the same reporting requirements, the same XBRL technology to tag them over time. And so one of the huge — one of the biggest advantages we have in the market right now is, we already own a big percentage of that financial reporting segment in those companies. So, it’s only natural they’re going to go to a provider that they trust already and have a relationship and add capability to report those different data points they have to for their ESG metrics. So, we feel we’re really well positioned to take a very sizable chunk of the market and in terms of reporting for ESG, both in the EU and in then U.S., just based on our market share in the financial reporting.
So that’s where we naturally go. Some of the sales teams are spooling up. We’re going to focus on — more on non-customers, but again, we’ve already had a good spattering of new logos but the majority are existing customers for the reasons I outlined.
Daniel Jester — BMO Capital Markets — Analyst
That’s helpful. And then on the revenue retention metric of 97%, excluding add-on, that’s been improving sequentially for a while now. Just can you dive in a little bit as to what specifically you think is driving that? And do you have further improvement there baked into your 2022 outlook? Thanks.
Martin J. Vanderploeg — President and Chief Executive Officer
I don’t know if you can improve on that number. It’s like the administering repairs. You can spend a lot of capital and get a small amount back. I think that number reflects that the new platform is being widely — everyone likes it. It’s a better way to put it. And the customer add numbers are up now and even higher than the old platform and we continue to add value into the platform and people feel and realize that and we also have just spent a lot of time as we’ve taken these customers to the new platform, developing relationships, helping them and that adds to our add-on sales after the fact.
So it’s a combination of very — we’ve executed strategies to reduce that. I don’t see it going up much more and — but I think we could drive it higher, but like I said, is not a good use of our budget right now. So — but the customers are extremely happy. Almost all of them that leave are because of M&A and bankruptcies and for cause stuff is very rare, very rare.
Daniel Jester — BMO Capital Markets — Analyst
Great. Appreciate the context. Thank you.
Operator
Your next question comes from the line of Terry Tillman with Truist Securities. Your line is open.
Joe Meares — Truist Securities — Analyst
Hi, everyone. This is Joe Meares on for Terry. Thanks for taking the question. I’m sure if you can comment on recent hiring in international markets that you play in, both management hires, as well as sales and go-to-market hiring? I’m just wondering what regions you’re growing headcount the fastest in?
Martin J. Vanderploeg — President and Chief Executive Officer
Well, thanks for the question, Joe. I mean, growing fast, as a percentage we are growing fast in raw numbers. Obviously, EMEA is further ahead in terms of its development. We’re getting up to the size where we’re several hundred people in EMEA and like I mentioned before, a significant number of our sellers, we’re adding sellers there, we’re recruiting and hiring. Obviously, that’s a slower process in the EMEA than it is in the U.S. We’re also adding it from a percentage point of view, actually more sellers in APAC of a smaller number. So in terms of the life cycle of those regions, EMEA is about halfway between APAC and North America and we’re adding sellers in all those regions, being driven by the fact that, so many of our solutions now like Global Statutory Reporting and ESG are global activities and our customers are asking us to have presence in all the major markets at some level. And so, we really need strong teams covering APAC and EMEA, and we’re making really good progress building those teams out. So significant part of the the spend build as we expand.
Joe Meares — Truist Securities — Analyst
Thanks for the color. Appreciate it. Just for a follow-up…
Martin J. Vanderploeg — President and Chief Executive Officer
Thanks.
Joe Meares — Truist Securities — Analyst
I think you’ve said in the past that average SEC deals started around 25,000 that are now well over 3x that. Acknowledging ESG as a super new product, how should we think about the cadence of price increases for newer products?
Martin J. Vanderploeg — President and Chief Executive Officer
Well, I think I said this last time also. Of course, my memory is not like it used to be. On our average deal size, the initial deals we’ve been selling, we have a pretty big standard deviation and their average is just a little bit below our ADS, not very much, and as we expand, if you look to how you approach the larger companies, the mid-market and the smaller companies, and we’re going to have a different price product for those markets as we go out and we haven’t figured all that out yet. We’re learning very fast, but I imagine that the average deal size will start a little lower than our current product mix and over time, grow beyond that as we add more value and get more usage. So, I think it’s going to a pretty similar lifecycle. I don’t think it will be quite as severe is when you’re a startup and you’re just trying to get logos and become relevant and stand the business up. So, I think you’ll see some of that trend, but you won’t see it as dramatically as we did with the SEC numbers. So — but the same trend.
Joe Meares — Truist Securities — Analyst
Thanks, again.
Martin J. Vanderploeg — President and Chief Executive Officer
Yeah. Thanks, Joe.
Operator
Your next question comes from the line of Stan Zlotsky with Morgan Stanley. Your line is open.
Stan Zlotsky — Morgan Stanley — Analyst
Perfect. Thank you so much and congratulations on good results and a strong finish to the year. Wanted to dig on the partner side of the business and how are partners playing into your international expansion, especially in Europe and maybe in Asia Pacific? And then a quick follow-up.
Martin J. Vanderploeg — President and Chief Executive Officer
That’s a good question, Stan and appreciate that. The partners are, I would say even more important in EMEA, and APAC. We see close rates that are much higher with partners and we see deal sizes that are better. Hiring is slower in APAC and EMEA. So we’re putting a lot of focus on partners and it’s going to be even more important, than it is in North America and it’s very important there too. But when you’re starting in new areas and you can get the attention of partners, it really moves the needle. In APAC, it’s been, we wouldn’t be anywhere without partners in APAC right now. And EMEA, it’s a very material part of our business there. So it — yeah, it is very important.
Stan Zlotsky — Morgan Stanley — Analyst
Okay. Got it. And then a quick follow-up on billings. They came in a little bit less than consensus numbers in the quarter. Is there anything that makes you mindful of as far as — like was there something maybe around like billing duration or the cadence in the quarter, anything that pulled into Q3 or maybe fell out of the quarter to highlight, specifically on the billing side?
Martin J. Vanderploeg — President and Chief Executive Officer
Well, I must let…
Jill Klindt — Senior Vice President, Chief Financial Officer and Treasurer
Hey, Stan.
Martin J. Vanderploeg — President and Chief Executive Officer
I’m going to let Jill answer that. So, go ahead, Jill.
Jill Klindt — Senior Vice President, Chief Financial Officer and Treasurer
Yeah. No worries. Thanks for the question, Stan and I think we’ve talked about the fact that for billings for us, we do have some variability in the contract wins that we have and we do have some two and three-year deals that are prepaid, that can sometimes there are some fluctuations into the mix on our billings number. But we didn’t see anything that caused us concern related to Q4 billing. It continues to move around a little bit, but we had — we thought we had good growth in Q4 and are really encouraged going into the new year.
Martin J. Vanderploeg — President and Chief Executive Officer
Yeah, I would add, Stan that we’ve been very consistent on that, our bill IRR. Billings numbers are just not good indicators of our bookings numbers and we were very happy with our Q4 bookings.
Stan Zlotsky — Morgan Stanley — Analyst
Okay. Perfect. Very helpful. Thank you guys.
Operator
Your next question comes from the line of Rob Oliver with Baird. Your line is open.
Rob Oliver — Robert W. Baird & Co. — Analyst
Great. Hi. Good evening, Workiva team. I think I’ll try to get Julie in the mix here. Julie, congratulations on your promotion. My question is obviously big focus on ESG here, and I think rightfully so given the magnitude of the opportunity and the early strength you guys have shown. You guys did make reference to some other fit-for-purpose solutions, which are getting investment in ’22, albeit a smaller portion of the investment, but I’d be curious to hear from you, which of those you’re most excited about and which we can expect to maybe start to hear you guys talk about on calls like this first? And then I have a follow-up. Thanks.
Julie Iskow — President and Chief Operating Officer
Sure. Hello and thank you for the congratulations. I’m honored in this year. Enthusiastic about our opportunity and where we’re headed, our strong team and help they contribute for going forward. I think as we typically talk about, we have our incubation solutions and our growth solutions and we talk about growth solution more broadly. We don’t really disclose all that information while we’re working through that. But we again… we work — we are continuing to invest in some of our solutions, continue to make them more fit-for-purpose at some level but we’re also investing in some work around MSP, so the managed service provider. So, we are investing in technology there and some of our solutions fit very nicely in that play with our partners. So areas in that is where you’ll see some of our continued efforts.
Rob Oliver — Robert W. Baird & Co. — Analyst
Great. Thanks. That’s helpful. And then I’m — Jill, just for you and just a book variation other question that came earlier but in your prepared remarks you gave some really nice color around all of the attributes and variables to consider around the bottom line, but not around the topline. So I just —- would be interesting to hear from you, again. I mean I know someone has already asked about capital markets and that’s clear, but just some of the factors that you weighed on your topline guidance for this year when you look at that number. Thank you.
Jill Klindt — Senior Vice President, Chief Financial Officer and Treasurer
Yeah. Absolutely. So — and I did give some color on that. I’m happy to talk here in a bit more, but we really do feel like those assumptions where we’re at right now, the war going on, obviously, in the current environment and so we are being conservative to the extent to be thinking that we think that makes sense for us right now. There is no sense in getting out ahead of ourselves. We have about a lot of investment for growth happening and while as you would expect, not all that investment will result in topline growth this year. We do have a lot of optimism around how we came into the year with the current pipeline, the bookings that we saw towards the end of last year that will impact 2022 revenue. And so, that’s why you’re seeing in the — in Q1, we do have higher growth in the guidance, then would be shown based on the total year guidance number.
Now, we are a company that always want outperform guidance. And so we think where we’re at right now, for our full-year guidance is the right spot and we look forward to trying to outperform that guidance throughout the rest of the year, not only with our existing solutions but working through with the ESG opportunity we have in front of us and continuing to work with our existing customers, our partners and extending all those relationships across our broad-based solution portfolio.
Rob Oliver — Robert W. Baird & Co. — Analyst
Great. Thanks a lot….
Martin J. Vanderploeg — President and Chief Executive Officer
Rob, I would…listen, just want to add a little on that too.
Rob Oliver — Robert W. Baird & Co. — Analyst
Oh, thanks Marty.
Martin J. Vanderploeg — President and Chief Executive Officer
Just from my perspective, this isn’t my first rodeo. I got a lot of miles on me. And as a management team, our credibility is very much determined by how well we predict the future. That’s not an envious place to be. And so we’re always going to take the position that we’re going to beat and raise and with all the uncertainty, Jill and I and Julie and our finance team and a whole bunch of people got together and we said, where we are looking? I mean, last year we — the consensus guidance was between 16% and 17% and I’m not saying that we’re going to beat these numbers this year as much as last at all, but I’m going to make darn sure on a baseline that we are not going to be viewed as someone that can’t predict their own business. We’re going to predict our business and to be conservative and remain relevant as good managers. And so, we always are going to beat our quarters on our road to a billion dollars and we see that clearly now. We know we can get there. And so that’s really our mentality. We’re in this for the long run. And when we put our guidance numbers out, people are always disappointed and in the end of the year, they’re not. So that’s just how we operate.
Rob Oliver — Robert W. Baird & Co. — Analyst
That’s helpful. Thanks, Marty. Thanks, everybody. Appreciate it.
Martin J. Vanderploeg — President and Chief Executive Officer
Yeah. Yeah.
Operator
Your next question comes from the line of Mike Grondahl with Northland Securities. Your line is open.
Mike Grondahl — Northland Securities, Inc — Analyst
Yeah. Thanks and congratulations on the quarter. Just listening the call, reading the press release, I mean, ESG sounds like probably, roughly your number one priority for ’22. What would you describe as your second priority and third priority?
Martin J. Vanderploeg — President and Chief Executive Officer
Thanks. Thanks for the question, Mike. I hope that came across pretty strong. ESG is by far our top priority this year. I think that like I told — I’ve said in the past, I’ve spent so much time talking to ESG experts, regulators, people on all of these different regulatory positions, senators in the U.S., I have just spent a ton of time feeling out this market and it’s clear, this is going to happen. It’s also clear that it’s a very big market and what’s amazing and we have a platform that we’ve invested from its inception over $600 million ready to go. Now that’s like I’ve said earlier, that it’s better to be lucky than good sometimes. I think we’re both. We’re very lucky and we have a platform all, I mean, 90% there, to take on this task. So yes, we are leaning in heavily and everyone saying these numbers have to be — have assurance wrapped around them, that means controls and audit and we’re going to integrate our controls and audit products in so that we can assure all the ESG numbers and we know how to report them to the jurisdictions like the SEC and the EU. So, if there’s ever been a a time when Workiva can have a very large TAM and take a big chunk of the market, this is it.
Now, other things that we’re doing are primarily platform focused. We — when we can make our platform better, it affects all of our use cases. Our annual and interim reporting for private companies, our management reporting, our global statutory reporting, all of our financial reporting, it impacts all of those things. So in terms of R&D, we’re leaning in there. In terms of sales, we’re continuing to enable and keep those salespeople focused and working to keep all those other bookings and revenue streams healthy but yeah I mean, ESG is getting the lion’s share of attention and investment right now, because like I said, it is generational for us. It really is and we’re just in the driver seat. I was accused of being giddy a couple of calls ago. So I’m not going to be giddy, but this just fell in our lap, and we’re not going to miss that. I think I would be remiss in my duty, in my idea, my judiciary responsibilities as running this company if we didn’t make this investment. So…
Mike Grondahl — Northland Securities, Inc — Analyst
Sounds good. Thank you.
Operator
Your next question comes from the line of Andrew DeGasperi with Berenberg. Your line is open.
Andrew DeGasperi — Joh. Berenberg, Gossler & Co. KG — Analyst
Thanks for taking my question. I guess first on the partnership you have with Persefoni. Just kind of question in terms of the data integration. What other datasets do you think you would need to really make the product more to like in what regulators are likely to ask in the future on these reporting requirements? Do you think there is any other tech partnerships you could sign that potentially help improve the product?
Martin J. Vanderploeg — President and Chief Executive Officer
There is no doubt about that. I mean Persefoni, everyone knows — I mean, I think everyone knows the story. There are a startup. They raised a ton of capital. They’re doing carbon accounting. We don’t do carbon accounting. We do reporting of ESG metrics and we bring all that data together. We will integrate with lots and lots of companies. Remember, the first acquisition was all about integrations and we have north of 150 integrations now. And for example, the E&I metrics, we pull those right out of Workday, and you can populate whatever things you have to report right out of Workday and will integrate with other HR systems. When we look at carbon, I’m sure we’re going to have lots and lots of companies that we can integrate with. We have really nice open APIs. So, we can do the integration or the customer can do the integration or the other tech partner can do integration.
So we’re in conversations with a lot of tech part — potential tech partners right now. It’s not lost on them that we sort of have the reporting and disclosure pipeline for them to get their data in and into these different documents that are required. That’s not lost on these people at all. So we’re having very good conversations with people and you will see a host of those integrations over time.
Andrew DeGasperi — Joh. Berenberg, Gossler & Co. KG — Analyst
Thanks. That’s helpful. And then secondly, there was a clearly announced a breach of your — some of your competitors in the financial reporting side. I was just wondering if there is more conversations you’re having with customers or potential customers on the security aspect of the Workiva’s platform and how has that activity sort of picked up in the last few weeks?
Martin J. Vanderploeg — President and Chief Executive Officer
Well, the discussion with the people, not on our platform has picked up. And that’s for sure. But yeah, I mean the the conversations around security never stop. We get audited by the big — by our big customers. They do onsite audits with just a day’s notice. We’re asked to do pen testing all the time for big banks and other big customers. We are a tech company. Okay. And we’re all about producing software tools, and we come from that lineage, that culture and we have large teams focused on security, not only from a software point of view, but I mean, if we were to ever get hacked, forbid and they got the credentials of someone’s laptop, they are going to have access to a very small number of customers. We have it all segmented. So, if breach does happen, they only get the five or ten customers. It’s not like they’re going to get to our — all of our 4,000 plus customers. We do all sorts of preventative things like that. We monitor logins, we demand two factor authentication, we train employees about fishing and run tests and try to trick ourselves all the time and we put endless effort into it and so that’s a cultural thing now. Could we get hacked? I mean anyone can get hacked. But I’d tell you what, it’s certainly something we put as much energy into as anybody and we feel very comfortable with our security. We feel very comfortable and we get our customers comfortable with it, since the day we started. Our documentation of security practices, FedRAMP, everything else is as it’s just top-flight. So we’re very proud of that. We spent a lot of money on it, and even though we have by far the largest, we represent by far the largest amount of market cap on the U.S. exchanges, they didn’t hack us. So…
Andrew DeGasperi — Joh. Berenberg, Gossler & Co. KG — Analyst
Thanks, Marty.
Operator
Your next question comes from the line of Alex Sklar with Raymond James. Your line is open.
Alexander Sklar — Raymond James Financial — Analyst
Thanks and I’ll add my congratulations, Julie, on the new role as well. Jill, we saw the sales efficiency metrics really picked up nicely in 2021. I know part of that, the lower T&E around the pandemic but given the ESG demand comments, all the partner investments that have gone into place, similar the regulatory catalysts is still out there. I’m curious if you think that 2021 levels are sustainable going forward?
Jill Klindt — Senior Vice President, Chief Financial Officer and Treasurer
Alex, I mean you hit the nail on the head. We’re definitely making investments in sales and marketing, heavy investments and along with that, we are going to have return of in-person events. So, not only we’re making investments for us, which largely can mean hiring the go-to-market activities, but we’re going to have the return of travel, we think, more so in 2022 and in-person events as well. So, I do think that we will be driving sales growth through — not only through rep sales and we hope can drive more efficiency but there will be some pressure on those expenses, just because we’re going to be hiring new reps and the return of those other expenses.
Alexander Sklar — Raymond James Financial — Analyst
Okay. Got it. So maybe some short-term pressure.
Martin J. Vanderploeg — President and Chief Executive Officer
I would for longer — I was just going to add that and I think Julie has talked about in the past and we’re doing a lot of investment in enablement, training our sales force and so on and so forth. But your point is well taken. When you ramp a sales team to get a lot of greener salespeople, and so you’re going to see a dip and then things like amplifier coming back. So yeah, we’re going to continue to improve sales efficiency over time. The trend will be upward. But I think this — there will be an adjustment this year.
Alexander Sklar — Raymond James Financial — Analyst
Okay. Great. That’s really helpful color. And then obviously, really exciting key comments, both in the prepared remarks and in response in the Q&A so far. I’m curious, it’s about 12% of your TAM, which I think you said is conservative, but can you just provide some help for rising framework on how much you think contribute to revenue in 2022 or within that $1 billion revenue target?
Martin J. Vanderploeg — President and Chief Executive Officer
I’m — we usually don’t break that out in numbers, I’ll tell you this, it will be a material part of our bookings this year. I mean it will be one of the top several categories already and we’ve never seen anything come up that fast. The thing that’s compelling about it is, our financial reporting platform is very well adopted by public companies for obvious reasons. We’re making great roads — inroads on private companies and some government stuff, but ESG, ultimately will fall under every human organization, so to speak. It will be NGOs, all the non-profits, all government agencies, water districts and all companies. I mean, the EU has publicly said there is 50,000 companies. I don’t know if there’s that many, but that’s how many to see will have to report.
So, the real compelling thing for this is, when you look at how much you can sell to each customer and how many customers are out there, P times Q, as it’s sometimes called, the number of places we can sell. This is the largest that we’ve ever had in our life cycle. So that’s what’s really exciting about it.
Alexander Sklar — Raymond James Financial — Analyst
Got it. Thanks for the color.
Operator
There are no further questions at this time [Operator Closing Remarks]